Takings Bills Worry Property Rights Supporters

by
Kevin Dietrich
March 28, 2012, 6 a.m.

Property rights advocates are hopping mad over companion bills in the General Assembly that would enable municipalities to not only seize and sell properties deemed unsafe, but also unoccupied homes, even if they are structurally sound.

Under bills S. 1117 and H. 4628, known in each chamber as the Rehabilitation of Abandoned and Dilapidated Buildings Act, property could be seized by the government and given to someone else to repair or demolish, at the expense of the original owner.

Neither has passed out of their respective chambers, but opponents of the takings bills still seem them as a threat.

Under the proposed legislation, a court-appointed receiver would take control of the property. They could refurbish it, then either bill the original owner for the repairs, or sell it if the original owner couldn’t come up with the money.

The receiver would garner a fee of up to 10 percent of the costs associated with property rehabilitation. If the sale of the property or proceeds from rental fees didn’t cover rehabilitation costs, the receiver could maintain control of the property until all costs plus any receivership fees were recovered, or until a court orders the property sold to satisfy the debt.

“This bill violates that most basic right you have: The right to do or not do with your property as you please,” said Talbert Black, a Lexington County resident involved with the Campaign for Liberty. “If you can’t control your own property, you can’t control anything.”

Black played a key role last month in scuttling an ordinance by Lexington County Council that would have forced property owners to keep yards and landscaped areas neat, buildings maintained, and swimming pools kept up.

The Senate bill is sponsored by Brad Hutto, D-Orangeburg; while the House bill is sponsored by Garry Smith, R-Greenville.

While neither could be reached for this story, The Nerve obtained a copy of an email exchange between Smith and Black in which Smith cites his bill as a “free-market alternative” to the condemnation and demolition of property.

But Black said the problem with bills such as these is that they operate on a basic premise that it’s OK for a government to take property away from an owner, give it to a receiver, allow the receiver to make improvements; allow it to be sold off; and if the receiver doesn’t make his money back, allow him to bill the original owner for the difference.

“It sets a dangerous precedent,” said Black, whose organization is a political nonprofit focused on educating the public about constitutional issues.

Some civic leaders see the Rehabilitation of Abandoned and Dilapidated Buildings Act as a necessary tool to rid their communities of blight.

“It’s oppressive and it’s an incredible burden not only on our staff in trying to deal with these properties, but also on the funds of the city in trying to demolish and rehabilitate them,” Florence Mayor Stephen Wukela told television station WBTW.

Beaufort City Councilman Mike McFee told the Hilton Head Island Packet that he understood such legislation would face opposition from those concerned with property rights, and that it would be a “last resort” for city officials,

However, McFee added, “It sends a very strong message that we are not going to just sit back and let the neighborhood fall into disrepair.”

Testifying before a Senate Judiciary subcommittee last month, Cashion Drolet, a representative of the South Carolina Association of Realtors, urged caution.

“We just want to make sure we’re not inadvertently providing a tool that degrades the rights of property owners in a situation where government and property owners cannot reach an agreement on the use of property that’s in need of rehabilitation,” she said.

The bills are extremely far-reaching, according to Black.

They would allow a court-appointed receiver to take possession and control of property, operate and manage it, collect rent, and make repairs and improvements necessary to bring the property into compliance with local codes, ordinances and state laws, according to the proposed legislation.

Court-appointed receivers would be able to demolish structures if receivers establish that they’re not economically feasible to bring up to code, or if structures are unfit for human habitation, deemed a public hazard, or are unoccupied by owners or lessees, regardless of their structural condition.

They can also be sold or demolished if it’s established that structures are unsecured from unauthorized entry by vagrants or children, regardless of their condition.

Receivers can receive a fee of up to 10 percent of costs and expenses involved in their efforts to rehabilitate or demolish property.

If property owners can’t afford to pay for rehabilitation, they stand a good chance of losing property outright under the bills.

That’s because under the proposed legislation, if total rehabilitation costs incurred by the receiver, plus receivership fees, exceed the income produced during receivership, the receiver may maintain control of properties until all costs plus receivership fees have been recovered or until receivership is ended.

In addition, a court may order the sale of properties if the owner fails to repay receivers’ outstanding costs and expenses plus receivership fees after notice has been given to owners.

If properties are sold and the proceeds exceed the total expenses incurred by receivers plus any receivership fees, net income would go to owners.

If properties aren’t sold and income produced exceeds total costs incurred by receivers plus receivership fees, rehabilitated properties shall be returned to owners, along with any net income.

Black said there have been a number of bills introduced recently that he believes represent outright attacks on property rights.

“Legal or not, having your property taken against your will, unless it is according to the terms of a contract that the owner willingly signed (as in a mortgage), then it is thievery,” he wrote in his email exchange with Smith. “Legal plunder is still plunder, as Bastiat wrote back in 1850 in The Law.”